Two Terrible Ideas, on Their Way to History’s Dustbin

And once they’re gone, we’ll finally be ready to progress on race relations in America.

August 26, 2016

President Ronald Reagan gives a televised address from the Oval Office, outlining his plan for tax reductions in July 1981. (Courtesy of the Reagan Library)

Want to Fight Back?

Sign up for Take Action Now and get three actions in your inbox every Tuesday.

Thank you for signing up. For more from The Nation, check out our latest issue.

Subscribe now for as little as $2 a month!

Support Progressive Journalism

The Nation is reader supported: Chip in $10 or more to help us continue to write about the issues that matter.

Fight Back!

Sign up for Take Action Now and we’ll send you three meaningful actions you can each week.

Travel With The Nation

Be the first to hear about Nation Travels destinations, and explore the world with kindred spirits.

Sign up for our Wine Club today.

Did you know you can support The Nation by drinking wine?

A recent Gallup poll found that worries about race relations were at an all-time high in the United States, and it’s easy to see why. This has been a summer of horrific violence born of bias and racism, perpetuating an epidemic of police shootings and mass killings. It has also been a summer of Republican presidential candidate Donald Trump baiting crowds at rallies until they scream racial epithets into television cameras, while he promises to usher in a neo-Nixonian era of “law and order” to police people of color in our urban cores.

And yet, against this disheartening backdrop, we believe there is reason to be optimistic about the future of race relations in America.

Below the surface and beyond the viral videos, we see the signs of organizers, activists, researchers, and policy-makers beginning to fundamentally rethink how our rules around race should change. We have seen signs for years, from Occupy to the Movement for Black Lives, that have shown how profoundly and desperately Americans want change. There has been a marked shift away from the unhelpful, race-neutral—or “color-blind”—policy making that has dominated the public debate for the last 35 years, in favor of active efforts to end racial inequity and isolation and invest in people of color. And though it may not be intuitive, we believe that the recent turn against colorblind policy is closely connected to the repudiation of trickle-down economics.

To understand why, it is helpful to examine how the ideologies of trickle-down and color blindness came up together and have reinforced each other.

We are all too familiar with the pitfalls of trickle-down economics, the theory that cutting taxes and regulations at the top will create prosperity for all. As we argue in Rewriting the Rules of the American Economy, more than 30 years of experimentation have shown that imperfect information and institutional distortions reward the powerful, who then write rules to perpetuate this cycle. Thus we end up with an increasing share of limited growth going to the top, with stagnant incomes for most and a hollowing out of the middle class.

But the orthodox belief in trickle-down economics, which has held sway since the 1980s, is no longer dominant in either major party. Donald Trump pays lip service to a kind of anti–trickle down populism, even if in reality he continues to push the Republican line on tax cuts for the rich. On the Democratic side, Hillary Clinton has joined figures like Elizabeth Warren and Bernie Sanders in calling trickle-down a “failed economic theory.” The emerging progressive economic agenda, which calls for rebalancing power at the top, strengthening our labor market by creating strong floors of standards and greater access for the most vulnerable workers at the bottom, and investing in public goods and economic security through a more robust role for the state, is the antidote to neoliberal tax-cutting.

4

5

What’s less widely recognized is that the same market orthodoxy has driven “race-neutral” and “color-blind” policy making. This is the idea that, in order to improve outcomes for people of all races and especially people of color, we must focus on high common standards and accountability and move away from policies that name, discuss, or demarcate people according to racial groupings. But this “trickle-down racial equity” approach does not account for the very unequal life chances and increasingly limited social mobility faced by people of color, which sees black Americans at every level of education earning less than their white peers.

As with trickle-down economics, after more than 30 years of trickle-down racial equity, our schools and neighborhoods and workplaces are no more racially integrated or equal; in fact, the little progress made in the late 1960s and 1970s has stalled and even reversed in some areas.

What both approaches share is a romanticized, and ultimately wrong-headed, view of the way that markets and other institutions work. The human capital approach is based on economic models that assume that market compensation is driven solely by productivity—the effort an individual is willing to exert and the skill with which it is exerted. But we now know this is wrong, and why.

Ready to Fight Back? Sign Up For Take Action Now

Markets are not perfect and will not “compete away” discrimination or economic inequality. Power and prejudice are embedded, and so we need to use better rules and smart government action to promote market competition rather than enable monopolies. We must view government as jurist, not as bureaucrat. In time, this dawning recognition will ultimately shift not just how we think, but how we act on the intertwined issues of race and economics.

Recognizing the flawed thinking behind both trickle-down and race-neutrality is important. As we have seen in this election season, new thinking opens up the political legitimacy of new policies: stronger financial regulation, investment in jobs and infrastructure in our poorest neighborhoods, changes on the Supreme Court in favor of race-conscious university admissions, and a growing backlash against school segregation. From our own “Rewrite the Racial Rules” report to the Movement for Black Lives policy agenda, we are seeing comprehensive proposals for deep and transformative change. Further, understanding that perfect markets are illusory allows us to see that the unearned profits that accrue to the top actually rob not only people of color but all middle-class and working families of the ability to earn fair wages, decent benefits, and all else that truly equal opportunity would afford them.

Economic prosperity and racial equity for all is more possible now than in the last 30 years. The protests and organizing we’ve already seen are a first step toward acknowledging the problems we have, which is essential to solving them. Now it is time to put the final nails in the coffin of the failed ideologies of trickle-down economics and race-neutral policy. In this election and beyond, we must harness the movement energy in the air and build the political will to advance economic and racial opportunity.

Felicia WongFelicia Wong is president and CEO of the Roosevelt Institute.

Dorian T. WarrenDorian T. Warren, a Fellow at the Roosevelt Institute, is a member of The Nation’s editorial board.

MLK Jr. was quoted during Warren's convention speech. Post-Selma – Chomsky has it from “I Have A Dream” onward – King was concerned with poverty without the focus on race. The perspective seems important: when inequality is on the rise internationally, conditions for U.S. blacks are slipping as for the world's population in general. I take the point of this article, that we can lose sight of a real issue by overgeneralizing; it is important to look as well using the focusing on race. Is it impossible, though, that both perspectives are important to consider?

(0)(0)

Jim Dickinsonsays:

August 27, 2016 at 7:51 pm

Yes, well we all know just what trickles down and it is not better governance.

(8)(1)

Gerald Sneirsonsays:

August 27, 2016 at 7:00 pm

All wealth is created by work. Corporations harvest and distribute that wealth. Without organized labor, organized money will dictate the distribution and it will not go well for the workers. The only other possible way to have more fair compensation is for the government to control the distribution, and what could possibly go wrong in that scenario.

(5)(4)

Robert Bornemansays:

August 27, 2016 at 3:52 pm

The authors promote two terrible ideas that need to go into history's dustbin: (1) that racial inequalities are distributed evenly on a national level and (2) that race, and not socio-economics, is the primary driver of these inequalities. Until those two ideas can be removed from the conversation and from policy recommendations, there is little or no meaningful hope for reform of the very real racial and socio-economic disparities which plague the US and will continue to do so with increasing vehemence.

(2)(4)

Larry Romosays:

August 27, 2016 at 11:53 am

When I attended high school in the mid-1960's my school was 15% black, 40% Hispanic and 40% white non-Hispanic, and 5% Asian/Native American. We had a black senior class president my senior year, and a black homecoming queen. Hispanics and blacks played a major role in the school. Fast forward to 2016 and it seems as though we have gone downhill. I see more racial divide now than I ever did in the 60's. Of course that school was probably an exception for those times?

(9)(0)

David Petersonsays:

August 26, 2016 at 8:06 pm

Excellent analysis. Now it is time to come out swinging: end the tax breaks, embrace the immigrants that do real work and reparations for people of color who have worked the hardest and received the lesst! And, jail time for the real criminals in suits and ties. No good reason to be squeamish.

(18)(2)

Walter Pewensays:

August 26, 2016 at 10:13 pm

We will be lucky if we get even a third of that. Realistically: We are never going to have reparations. It's been discussed. We won't ever do it. Immigrants--they'll keep coming, and keep getting abused. Only when each groups critical mass get large enough do we have pushback (Latinos). Jail time? Most of us would probably be happy just with the prosecution of Dick Cheney, but don't hold your breath. That leaves taxes. And that takes guts, the kind FDR had. That is about the only thing you mentioned that's realistic, given that after 36 years, Ronnie's play show has finally been revealed as the trip to the gutter that it has become for us.

(15)(2)

Peter Henrysays:

August 26, 2016 at 12:25 pm

I was not impressed by the article. Surely "trickle down" has to go. But I do not believe it is a failed policy, the result of a mistake. It is doing exactly what was intended - to transfer wealth from the bottom and middle of society to the top. The best that can be hoped for from traditional politicians like Clinton, is to put a "kinder, gentler" veneer on a policy designed to perpetuate the status quo.
It also seems that the authors can't quite say the words "affirmative action" even though they are arguing against the notion of color blindness, another policy that perpetuates the existing power structure.

(15)(4)

Walter Pewensays:

August 26, 2016 at 10:57 am

This article is very good, but it should be noted--most Republican candidates are still trying to sell trickle down. At this point it speaks of the actual intelligence of those who are relatively young and pledged GOP. Also, as a humorous aside, many of us found this photo with Reagan, rouged cheeks and all, attempting to look thoughtful and scholarly with the charts to be of utmost hysteria back in 81. I well remember it......

(9)(1)

Doug Barrsays:

August 26, 2016 at 9:06 am

To end "trickle-down" economics we have to raze the vertical economy which will definitely improve race relations. http://thelastwhy.ca/poems/2012/12/13/economy.html

(7)(3)

Joann Klebersays:

August 26, 2016 at 6:05 pm

Money doesn't trickle down.. It leaves poor people high and dry and rich people awash at the receiving point. I wish the phrase would go away.